Japan, France and India on Thursday launched an initiative to coordinate restructuring of Sri Lanka's huge debt among its creditors.
The start of the negotiation process over Sri Lanka, which is reeling from its worst financial crisis in decades, was announced in Washington on the sidelines of International Monetary Fund and World Bank meetings.
Japan, this year's chair of the Group of Seven industrialized countries, has taken the lead with the two countries in preparing a common framework to help Sri Lanka emerge from the crisis.
Japanese Finance Minister Shunichi Suzuki, speaking at an event to announce the launch, said it is a "historic accomplishment."
But the outlook remains unclear as China, the biggest bilateral creditor of the island country of 22 million, is not yet part of the initiative.
Suzuki said it is important that not just the Paris Club of wealthy creditor countries but also emerging creditors, such as China, come together to discuss the restructuring. He stressed that the new platform is "open to all creditors."
As of September 2022, Sri Lanka had $35.1 billion in foreign debt. Nineteen percent of it was owed to China, 7 percent to Japan and 5 percent to India, according to Japan's Finance Ministry.
Sri Lanka sealed a loan of nearly $3 billion from the IMF last month but there is still a long way to go.
The country's President Ranil Wickremesinghe, who attended the event virtually, called for continued assistance also from multilateral partners and commercial creditors, saying there is a need to "establish a solid foundation enabling us to uplift the social-economic well-being of our population."